ITAT Amritsar Judgments — December 2018

The Tribunal held that the assessee's explanations for the cash deposits were false and unsubstantiated. The penalty proceedings were valid, and the notice under section 274 was not defective to the extent of invalidating the proceedings.

The Tribunal held that the assessee failed to provide satisfactory evidence for the source of expenditure on house construction. The explanation offered was unsubstantiated and lacked cogent evidence, and the penalty was therefore sustainable.

The Tribunal partially allowed the assessee's appeal. It accepted the explanation for certain cash deposits and restricted the addition for the plot acquisition. The profit on a house sold in the subsequent year was to be assessed in that year.

The Tribunal held that the mention of a wrong section is inconsequential. It also noted the lack of evidence for the housing loan and construction expenses, leading to an adverse inference. However, acknowledging some construction activity, the Tribunal allowed a further relief of Rs. 1 lac.

The Tribunal allowed the appeal, deleting both disallowances. It found the Cupola expenses to be necessary and incidental to the business, and the property improvement expenses were supported by vouchers and reflected in the books of account.

The Tribunal held that the Revenue failed to provide material to establish the assessee was engaged in property sale and purchase as a business. Relying on Supreme Court judgments, it concluded that the sale of long-held personal investments at a profit constitutes capital accretion, not business income.

The Tribunal held that whether the assessee paid the creditors, or someone paid on its behalf, or the creditors introduced their own money, Section 41(1) of the Income Tax Act would be attracted due to the remission or cessation of a trade liability. The addition of Rs. 4,38,872/- was upheld as income for the relevant year.